Canadian regional development policy · · 2018-03-27efforts made to design and deliver regional...

Canadian regional development policy: Flexible governance and adaptive implementation

23 January 2017

Neil BRADFORD

Department of Political Science, Huron University College, Western University, London Canada

EC-OECD Seminar Series on Designing better economic development policies for regions and cities

2 CANADIAN REGIONAL DEVELOPMENT POLICY: FLEXIBLE GOVERNANCE AND ADAPTIVE IMPLEMENTATION © OECD 2018

Background information

This paper was prepared as a background document to the OECD-European Commission Seminar on “Multi-level

governance for regional economic development” held on 23 January 2017 at the OECD Headquarters in Paris,

France. It sets a basis for reflection and discussion.

About the Project

This seminar is part of a five-part seminar series in the context of an EC-OECD project “Designing better economic

development policies for regions and cities”. Other sessions in the series addressed the use of: contracts for

flexibility/adaptability, performance indicators, financial instruments, and insights from behavioural science. The

outcome of the seminars supports the work of the Regional Development Policy Committee and its mandate to

promote the design and implementation of policies that are adapted to the relevant territorial scales or geographies,

and that focus on the main factors that sustain the competitive advantages of regions and cities. The seminars also

support the Directorate-General for Regional and Urban Policy (DG REGIO) of the European Commission in the

preparation of the impact assessment for the post-2020 legislative proposals and to support broader discussion with

stakeholders on the future direction of the delivery mechanisms of regional policy.

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© OECD 2018

This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein

do not necessarily reflect the official views of the OECD or of the governments of its member countries or those of the European Union.

This document and any map included herein are without prejudice to the status or sovereignty over any territory, to the delimitation of

international frontiers and boundaries and to the name of any territory, city, or area.

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CANADIAN REGIONAL DEVELOPMENT POLICY: FLEXIBLE GOVERNANCE AND ADAPTIVE IMPLEMENTATION © OECD 2018 3


Table of contents

Introduction .............................................................................................................................................. 5

Canadian regional development policy: Context and evolution .......................................................... 6

Canadian metagovernance: Regional policy through hybrid contracts ............................................... 8

Regional development policy in action ................................................................................................. 12

Flexible regional governance: Institutional intermediaries ............................................................... 12 Territorial policy adaptation: Departmental devolution .................................................................... 14 Community-based regionalism: Learning pilots ............................................................................... 15

Conclusions ............................................................................................................................................. 16

References ............................................................................................................................................... 19

Annex A. Regional development agencies in focus .............................................................................. 21

Annex B. Territorial policy adaptation in focus .................................................................................. 26

Annex C. Community-based regionalism in focus ............................................................................... 29

Tables

Table 1. Metagovernance: A contracting continuum ......................................................................... 10 Table 2. Canadian regional development policy: An implementation continuum ............................. 11 Table 3. Flexible regional governance in focus .................................................................................. 14 Table 4. Territorial policy adaptation in focus ................................................................................... 15 Table 5. Community-based regionalism in focus ............................................................................... 16 Table A.1. Western Economic Diversification Canada .......................................................................... 25 Table A.2. Canada Economic Development for Quebec Regions .......................................................... 25 Table A.3. Atlantic Canada Opportunities Agency ................................................................................ 25 Table A.4. Western Economic Diversification Canada .......................................................................... 25 Table A.5. FedNor .................................................................................................................................. 25 Table A.6. FedDev Ontario .................................................................................................................... 25


Introduction

Canada provides an instructive case for studying regional economic development and

evolving governance institutions and policy mechanisms. For more than five decades, the

regional policy field has engaged governments at all levels working to close persistent

territorial disparities in gross domestic product (GDP) per capita and economic opportunity

(Bradford, 2010). Implemented in a decentralised federation, Canadian regional development

occupies a crowded and contested policy space involving substantial input from not only

federal and provincial/territorial governments, but from an array of partners, including

private sector firms, representative associations, post-secondary institutions and community

organisations. Equally, First Nations participation is integral to regional economic

development and Canada is now one of the most urbanised countries in the world, with

cities seeking greater policy autonomy. In Canadian regional development policy, the

interdependencies are multiple – among levels of government and First Nations; across

public, private and community sectors; and between policy makers and knowledge

networks. Yet, Canada lacks an effective upper house in parliament to give political voice

to regional perspectives. It follows that more informal relations and mechanisms for

multilevel, cross-sectoral collaboration are crucial for policy progress (Conteh, 2013).

This paper offers an interpretation and mapping of the sustained and wide-ranging

efforts made to design and deliver regional development policy in Canada. Canada’s

regional development policy architecture is structured around the federation’s foundational

principle to provide equal opportunities for well-being to all Canadians regardless of

where they happen to live. This principle finds constitutional expression in Section 36

that commits federal and provincial governments to “furthering economic development to

reduce disparity in opportunities” and “providing essential public services of reasonable

quality to all Canadians”. To realise these goals, in the second half of the 20th century,

the federal government institutionalised a two-track social and economic policy framework:

first, negotiating inter-provincial equalisation payments for quality public services

everywhere, and, second, implementing geographically targeted development assistance.

This paper discusses the second developmental track of Canada’s evolving regional

policy architecture, with a focus on “flexibility” and “adaptability”. In Canadian regional

development discourse, flexibility refers to the capacity of the governance system to

renew over time as policy goals shift in response to external shocks or internal learning

and changing conditions require different instruments or mechanisms. As in other

countries, Canadian policy flexibility is about the time dimension. Adaptability has two

connotations in the Canadian policy setting. On the one hand, given the great scale and

diversity of the Canadian economy, adaptability refers to the spatial sensitivity of national

policies through regional tailoring and local customisation of programmes. On the other

hand, adaptability signals a need or interest in extending the issue-scope of regional

policy, for example, beyond the traditional economic competitiveness concerns to

ecological sustainability, social inclusion and cultural recognition. Canadian regional

policy adaptability thus involves the place dimension through community engagement,

with implementation partners from multiple sectors, notably Indigenous peoples.

This paper begins with a brief review of the successive regional policy waves that

have resonated with federal governments dating back to the founding moment in the early

1960s. The focus then shifts to the current third wave known as the “new regionalism”

that now has considerable policy momentum across the OECD. The paper proposes that

the Canadian engagement with the new regionalism represents a form of what scholars


term “metagovernance” (Jessop, 2004; Sorensen, 2006; Bell and Hindmoor, 2009)

wherein national governments “steer at a distance” through an “eclectic mix” (Dunn, 2016)

of mechanisms and tools. To illustrate, the paper explores three distinctive national policy

strategies – flexible regional governance, territorial policy adaptation and community-based

regionalism – highlighting their respective institutional structures, operative strategies and

engagement mechanisms. The annexes provide programme descriptions for each strategy that

capture granular variation in inter-governmental structures and multi-sectoral processes.

Overall, the analysis reveals the significance of hybrid contracts, blending transactional

and relational elements to bring flexibility over time and adaptability across space and

issues to regional development policy. The paper closes by drawing from the Canadian

experience five lessons about achieving appropriate flexibility and adaptability in

regional development policy. It also offers thoughts about ongoing Canadian innovations

as the Trudeau government actively pursues collaboration and partnerships that extend

the issue-scope of regional policy.

Canadian regional development policy: Context and evolution

Regional economic development is a Canadian policy field with a rich and varied

history, marked by an evolving interplay of theoretical models, policy practices and

governance structures (Savoie, 1992). Since the early 1960s, three distinct waves of

federal regional development activity can be identified. Each wave defines a particular

policy period, with transitions across periods driven by new ideas and practical lessons.

The result is a cumulative body of policy knowledge establishing the context for the

concerted federal activism of the past decade or so.

In the late 1950s the Canadian economy entered a new spatial phase as cities emerged

as the engines of national growth, while rural and resource-based regions fell behind.

Trend lines for the hinterlands moved in the wrong direction: high unemployment, low

educational achievement and literacy rates, poor housing and outdated infrastructure, and

limited adoption of new technologies. The result was an out-migration of people, and

political demands from several premiers in have-not provinces for federal redress. During

the 1960s, the federal government acted in a unilateral fashion, intervening directly in

rural areas designated for assistance based on various indicators, and in urban centres

identified as “growth poles” for lagging regions. Designed in Ottawa through federal

sectoral departments for agriculture or industry, the first wave of regional development

policy was top-down and centralised. However, it was soon clear that the federal

government faced major constraints in acting from above on its own, the most salient of

which related to shared jurisdiction with the provinces over key aspects of regional

development. Without provincial involvement, federal interventions could not effectively

integrate support for economic sectors, businesses or agricultural producers with crucial

land-use and infrastructure planning, nor credibly direct regional interlocutors such as

local governments and development agencies. While a new Department of Regional

Economic Expansion was established in the 1970s to co-ordinate federal programming

and align with the provinces, Canada’s first round of regional development policy was

judged harshly both for its clumsy administration and failure to narrow regional

disparities (Bradford and Wolfe, 2012).

The 1980s was a critical decade for Canadian regional development policy. Critique

and reflection produced significant refocusing and recalibrating of policy (Bradford and

Wolfe, 2013). Basic goals shifted: regional development was no longer about eliminating

disparities between leaders and laggards but rather enabling regions facing particular


challenges to realise their full potential, not by focusing on needs, but by developing

assets and building capacities. The new orientation emerged against the backdrop of the

deep recession in the early 1980s, as the federal government introduced several employment

and industrial adjustment programmes that worked directly with a host of subnational

partners in hard-hit rural and urban communities. Academic support came from new

schools of regional development emphasising community-building and local economic

development. In 1987, the federal government introduced a substantially new structure

for regional development policy. Regional development agencies (RDAs), with separate

departmental structures and ministers of state, were established for Atlantic Canada and

Western Canada: the Atlantic Canada Opportunities Agency (ACOA) and the Western

Economic Diversification Canada (WED) respectively. A few years later, similar agencies

emerged for Quebec regions (CEDQ) and in Northern Ontario, an entity located within

Industry Canada, FedNor. In 2009, two new agencies were established, the Federal

Development Agency for Southern Ontario (FedDev) and the Canadian Northern

Development Agency (CanNor), completing a pan-Canadian regional development policy

framework. With head offices in the regions, decentralisation aimed at a stronger regional

presence and profile for Ottawa as well as more collaborative governance, whereby

development initiatives reflected local priorities and accountability for investment outcomes

was shared among governments and their policy partners in the private and community

sectors.

Yet, broad agreement that good regional development policy was neither closing

disparities nor one-size-fits-all still left open challenging questions about how the different

levels of government could find complementary roles and the criteria to guide federal

investments in bottom-up regional development. The policy target shifted from chasing

smoke stacks to building research infrastructure and filling market gaps through decentralised

agencies; however, concern remained about a plethora of new programmes administered

by discrete departments with little integration or co-ordination. Tackling these issues became

the focal point in the formulation of today’s third wave of regional development policy.

The “new regionalism” begins from the premise that regions need to maximise

investments in local assets that cannot be easily replicated or moved to other parts of the

globe or country (OECD, 2011; Gertler, 2010). Rather than playing in a zero-sum competition

for inward investment, the key issue is how firms, sectors and institutions in particular

geographic contexts reconfigure their existing knowledge base and localised capabilities

to develop new areas of commercially viable specialisation and competence. While this

approach does not eschew support for physical or research infrastructures, it assumes that

returns on such hard investments depend on the quality of local workers and management,

and the efficiency of community-based networks, in transmitting ideas and delivering

services. In the new regionalism, the imperative is innovation – generating and applying

new ideas to production processes and good and services – across all regions and sectors

of the economy (OECD, 2011). In some places, the specific priority might be upgrading

traditional manufacturing, while in others it is diversifying resource-based economies or

growing leading-edge technology firms. In all cases, new forms of collaboration among

business, research institutions, education and training providers, venture financiers, and

government are critical for the knowledge flows – not only formal research but equally the

informal or tacit know-how – that drive innovation.

There is no automatic process or linear pathway that connects the worlds of research,

commercialisation and business. Regional innovation systems that grow clusters do not

pop up just anywhere. Governments must invest in the knowledge infrastructure, catalyze

networks and enable local actors to sustain their “innovative milieu”. They devolve power to


the geographic scale where organisational synergies and policy interdependencies play

out, and they must align their investments with local priorities. Such place-based intervention

is integral to the new regionalism. Rather than layering new programmes on existing ones

in a disjointed fashion, governments collaborate across different levels of government,

and between public and private actors at the local scale to identify and cultivate assets that

constitute unique and durable sources of competitive advantage.

A unifying theme in the new regionalism is the importance of knowledge, whether for

firms seeking to innovate, communities mapping their assets or governments exploring

how to work together for regional advantage (OECD, 2007; 2009). Central to this

knowledge building has been the development of new governance models, policy strategies

and implementation mechanisms. Regional development has always been a focal point

for Canadian policy learning and the continuing period is no exception. As the renowned

regional policy expert Donald Savoie puts it, Canadian federal governments must

continuously “invent an in-house capacity” to implement national policies through

“regional lenses” (Savoie, 2015). Over the past two decades, inventive strategies of federal

metagovernance have emerged to deliver Canada’s “new regionalism” through hybrid

contracts that provide flexibility and adaptability. The rest of this paper outlines this

Canadian governance approach and illustrates its concrete policy practice.

Canadian metagovernance: Regional policy through hybrid contracts

While there is a growing appreciation of the value of co-ordination among governments

and across sectors, there is variation in how political systems adapt their governance

structures and policy frameworks to the complexity (Bradford, 2008). Some countries

have created institutional focal points such as the Council of Australian Governments or

legislated national spatial plans; however, the Canadian regional policy framework has

been more informal and diffuse. Broadly informed by the constitutional commitment to

equalise opportunities and services across the country, Canada’s regional policy is

implemented in a “loosely coupled framework” (Clarke and Gaile, 1998) with multiple

governments and community-based organisations coming together for joint work on

development projects or territorial strategies through a range of collaborative

mechanisms – agreements, contracts and memoranda of understanding. Key nodes in this

decentralised public governance network include: federal regional cabinet ministers, federal

RDAs, federal regional departmental councils, the Provincial Council of the Federation,

First Ministers summits, federal-First Nations negotiations, and the federal whole-of-

government policy framework. At various points in time, Canadian political leadership

has imposed some coherence on the system through overarching policy projects such as

the 1990s Social Union Framework and the New Deal for Cities and Communities in the

first decades of the 2000s.

The decentralised and loosely coupled Canadian regional governance system has been

aptly termed “metagovernance” (Doberstein, 2013; Bradford, 2014). Drawing on the

second generation of governance research, Canadian policy scholars apply metagovernance to

capture the diverse ways in which federalism’s inter-governmental relations orchestrate

territorial policy networks to address complex challenges through investment,

experimentation and innovation. Avoiding the dysfunctionalities of either top-down policy

mandating or bottom-up decentralisation, Canadian metagovernance seeks a more flexible

assertion of public authority adapted to the conditions and contexts of a decentralised

federation and regionalised economy. Governments mobilise and empower representative

civil society networks to bring their localised expertise and community capacity to public

problem solving. Accompanying the devolution, metagovernance retains emphasis on


issues of legitimacy, requiring that governments maintain democratic accountability by

shaping and steering network activities, and establishing policy goals and reporting

requirements. Through this mix of authority, knowledge and capacity, metagovernance brings

into focus a flexible national policy framework that uses networked relations to adapt to

territorial variation in partners and priorities.

The application of metagovernance to the Canadian regional policy experience directs

attention to the repertoire of strategies, mechanisms and tools that federal governments

deploy to “steer at a distance” (Bell and Hindmoor, 2009). While scholarly metagovernance

research remains quite theoretical, more applied policy analysis investigates implementation

issues, identifying the instruments that governments utilise (OECD, 2007; Bradford,

2010). Most important are contracts that set the ground rules for metagoverning: identifying

partners, setting objectives, sharing information and ensuring engagement through credible

commitments and mutual obligations. Contracts are the principal means for aligning

national policy goals with regional priorities to be implemented through networked

relations among public, private and community sectors. Policy research distinguishes

between two types of contracts. Transactional arrangements follow classical principal-

agent logic where the respective obligations and contributions of the parties can be

established in advance, allowing the upper-level policy authorities to enforce compliance

on subnational recipients or beneficiaries. Relational contracts offer flexibility to the

contracting parties based on mutual recognition that precise outcomes cannot be specified

in advance, and that through learning and experimentation shared goals will be revealed

as focal points for joint investment.

Canada presents an interesting case where these two contracting types have been

utilised independently over time and, most recently, in blended or hybrid forms (OECD,

2007). Transactional contracts were prominent in the early decades of federal regional

economic development policy where prescriptive financial transfers were made to

individual businesses and provinces. Following the 1987 reorganisation of regional policy

delivery, the federal development agencies negotiated more relational contracts with

community-based actors and provinces/territories in pursuit of localised planning for

programme alignment. However, concerns about financial management and wasteful

public spending in the wake of the so-called federal sponsorship scandal in the early

2000s brought new interest in policy mechanisms that combined the respective strengths

of each contract type – the monitoring and accountability of transacting and the dialogue

and experimentation of relating.

The precise implementation of metagovernance has evolved through political practice,

adapting to different governing political parties and their particular “theory of federalism”.

With their Social Union Framework and New Deal for Cities and Communities, Liberal

governments of the late 1990s and early 2000s embraced “collaborative federalism” that

advances an activist role for the federal government through use of the federal spending

power in matters deemed of national consequence in provincial jurisdiction, negotiation

of multilateral inter-governmental policy accords, and federal-local partnerships with

municipalities and community organisations. In contrast, the Harper Conservatives preferred

“open federalism” that kept governments to their own constitutional responsibilities, limited

use of the federal spending power, and relied on bilateral relations with provincial and

territorial ministers to achieve sector-specific policy deals. The Trudeau Liberal government

clearly situates itself in the collaborative federalism tradition, with a vision quite different

from its Conservative predecessor. It is exploring various metagovernance strategies to

work with provinces, territories and Indigenous leaders on aligning national goals with


regional priorities and local capacities. Although still in formation, the Trudeau government’s

collaborative vision and multilevel practice will be considered in the conclusion of this paper.

Regional development is one Canadian policy priority that persists through changes

of government and shifts between collaborative and open theories of federalism. Since the

early 2000s, a variety of territorially based national initiatives have been implemented by

federal Liberal and Conservative governments, all utilising hybrid contracting for place-

based policy (Bradford, 2007a). These initiatives include financial transfers for municipal

and regional infrastructure, framework agreements for tri-level innovation in complex

policy challenges, and learning pilots for knowledge transfer and community capacity-

building. Each policy involves forms of hybrid contracting allowing flexibility in governance

and adaptability in implementation. Evolutions are observed within initiatives as some

launched transactionally and then incorporated relational elements where others reversed

the progression as concrete funding opportunities emerged through joint dialogue. Hybrid

contracts are now recognised in the central agencies responsible for transfer design.

Specifically, the Treasury Board of Canada formally designates them as “other transfer

payments”, acknowledging their varying blend of the central conditionality of contribution

agreements and the local discretion of grants (Government of Canada, 2015).

Table 1. Metagovernance: A contracting continuum

Transactional Relational Hybrid

Information availability Upfront Over time Ongoing

Co-ordination problems Stated before signature Solved after signature Objectives in advance, adjustments in practice

Issue complexity Generally mono-sectoral Generally multi-sectoral Sectoral focus, multiple partners

Enforcement External Often bilateral/third party Central oversight and bilateral learning

Challenges Risks Uncertainty Accountability and adaptability

Source: Adapted from OECD (2007), Linking Regions and Central Governments: Contracts for Regional

Development, http://dx.doi.org/10.1787/9789264008755-en; and Charbit, C. and O. Romano (2017),

"Governing together: An international review of contracts across levels of government for regional

development", http://dx.doi.org/10.1787/ff7c8ac4-en.

Hybrid contracting is a prime instrument in Canadian metagovernance. It aligns

national, regional and local priorities; builds joint implementation capacities; and

demonstrates flexibility over time in connecting short-term projects to longer term goals

as well as adaptability across space in customising support to communities. The

metagovernance toolkit based on Canadian regional policy practice features three modes

of intervention and collaborative mechanisms:

1. Flexible regional governance: Through Canada’s six federal RDAs now covering

the entire country, the federal government engages multiple policy-sharing

partnerships implementing “explicit regional policy” (Bradford, 2007b). Functioning

as institutional intermediaries, the RDAs connect governments, firms, researchers

and community organisations to inform and facilitate strategic planning and the

delivery of programmes and projects. They bring a regional lens to federal economic

development policy and translate national goals into regional and community

settings. Operating in a crowded policy space, each RDA co-ordinates with

provincial/territorial development priorities while also advancing coalitions where

the federal government has particular interest or obligation, for example, with

constituencies historically underrepresented in mainstream development such as

Indigenous peoples and ethno-cultural minorities. Collectively, the RDAs have

http://dx.doi.org/10.1787/9789264008755-en

http://dx.doi.org/10.1787/ff7c8ac4-en


been leaders in multilevel governance, making extensive use of contracts for

infrastructure investments and tri-level policy innovation. Each has evolved to

incorporate the shifting priorities of the federal government and adapt them to

regional conditions and capacities.

2. Territorial policy adaptation: Canadian federal and provincial governments

have recently collaborated to embed a regional or local lens in horizontal policies

that cross jurisdictions or departments. Delegating authority to community-based

actors to adapt national programming, such territorial sensitivity is an “implicit

regional policy” (Bradford, 2007b). Such practices arise particularly in efforts to

extend regional development beyond traditional territorial competitiveness to

incorporate social inclusion, cultural diversity and ecological sustainability. The

premise is that challenges and opportunities in specific sectors may exhibit substantial

variation in their regional expression. Effective implementation requires municipal

and community input enabled by local federal or provincial/territorial officials

who communicate feedback to central policy designers. In turn, local implementation

capacity is built as actors mobilise knowledge and networks to meet national

programme goals on terms matched to their community needs and aspirations.

3. Community-based regionalism: Canadian policy communities often collaborate

through pilot projects or demonstration initiatives designed to generate knowledge

that empowers federal or provincial policy designers and regional or local actors on

the front lines of implementation (Doberstein, 2013). Given the highly decentralised

nature of Canadian governance and policy, the learning is explicitly mutual with

insights flowing both vertically from local to national levels and horizontally

within community-based regional networks. Lessons generated aim to address

local gaps in technical expertise or organisational capacity as well as to bring

experiential knowledge and network expertise to upper level administration. Such

pilot projects typically tackle “wicked problems” – those that are deep-seated and

localised in their expression and therefore resistant to off-the-shelf solutions.

Community-based regionalism involves “learning by doing”, testing theories, sharing

lessons, transferring practices and scaling successes into policy innovation.

Since the early 2000s, Canadian public policy has featured each of these three

metagovernance regional strategies, all mixing and matching instruments for flexibility

and adaptability. The result is a loosely coupled national framework for governance in a

regionalised economy and decentralised federation. Eschewing one-size-fits-all templates,

Canadian regional development policy seeks to adapt policies to local particularity while

preserving equitable opportunity across space. The discussion now turns to case examples

of implementation of Canada’s three metagovernance strategies as depicted in Table 2.

Table 2. Canadian regional development policy: An implementation continuum

Flexible regional governance Territorial policy adaptation Community-based

regionalism

Logic of intervention Regional representation and innovation

Local variation and programme tailoring

Place-based knowledge and capacity-building

Delivery mechanism Institutional intermediary Departmental devolution Learning pilot

Purpose of contracting Policy sharing Delegated authority Mutual empowerment

Logic of contracting Hybrid contract (from transactional to relational)

Hybrid contract (both transactional and relational)

Hybrid contract (from relational to transactional)

Canadian example Regional development agencies

Federal Gas Tax Fund Urban development agreements


Regional development policy in action

Flexible regional governance: Institutional intermediaries

In 2015, all six RDAs were placed within the new federal Department of Innovation,

Science and Economic Development. In the past, several of the RDAs reported to

different ministers. The current reorganisation is designed to better align the activities of

each RDA with the federal whole-of-government framework, enable greater mutual

learning and knowledge transfer among the RDAs, and embed a shared pan-Canadian

focus on the federal innovation agenda that seeks to balance strategic investments in high-

impact firms and emerging sectors such as clean technologies, while advancing existing

industrial strengths and economic diversification.

Each RDA (with the exception of the smaller CanNor and FedNor) operate with an

approximately five-year renewable CAD 1 billion budget. As reported in Annex A, all of

the RDAs divide their spending across the same three core priorities: 1) business

innovation (60%); 2) community development (35%); and 3) knowledge mobilisation/policy

advocacy (5%). With these three activities, the RDAs deliver numerous programmes and

services. Programming can be grouped into four main policy instruments: financial

assistance, knowledge mobilisation, community networks and infrastructure programming.

Financial assistance: RDAs use transfer payments to provide assistance for

economic and community development to private businesses, non-profit organisations, and

other levels of government. Such loans and grants are delivered through various mechanisms,

including inter-governmental partnership agreements and contribution agreements with

local organisations. The guiding principles of RDA investments are: first, that they are

targeted to finance commercial and non-commercial development initiatives that would

otherwise have been postponed or abandoned if left solely to market criteria; and second,

all payments to other orders of government must respect jurisdictional responsibilities

while ensuring accountability to citizens for expenditures and results. In making transfers,

the RDAs comply with federal Treasury Board policy on transfer payments that distinguishes

among conditional transfers (contributions), unconditional transfers (grants) and “other

transfers” (terms and conditions set by special agreement for “flexible conditionality” as

described below in the Gas Tax Fund). In all cases, the RDAs are expected to select the

optimal transfer payment instrument based on risk assessment of the project and the

proponent, striking the balance between managerial control and operational discretion.

Through contribution agreements, the RDAs negotiate with project partners outlining the

core objectives, funded activities, expected outcomes and performance measures to

support programme management, programme evaluation and external reporting. If

monitoring reveals non-compliance with the obligations set out in contribution agreements,

the RDA can withhold payments. With ministerial approval and communication with the

Treasury Board, the RDAs can amend the terms and conditions of contribution agreements

based on evaluations or audits indicating problems, or through strategic policy reviews.

A special example of funding flexibility in Canada is federal “aboriginal transfer

agreements” that often involve longer term programming and broad-based government-

community collaboration. This transfer instrument includes a “flexible approach” when

programme objectives can be better achieved by allowing the recipient to redirect funding

among cost categories established in the agreement and permitting funding to roll over

fiscal years. Where the relationship with the recipient extends to five years or more, the

aboriginal transfer can take a “block approach” through a single multi-year funding

agreement linked to multi-programme objectives. This allows flexibility to adjust the


relative priority of programmes in the block and to redirect funding among the

programmes to address changing circumstances and the recipient’s evolving priorities.

Decisions about the flexible transfers are based on the recipient’s demonstrated capacity

to manage transfer payments through programme design and delivery to reporting and

accountability.

Knowledge mobilisation: The RDAs have been active in policy research and

advocacy. This has taken various forms, including partnerships with prominent think tanks to

report on region-specific trends and priorities, working with educational institutions to

promote youth entrepreneurship and scientific learning, and positioning regional firms in

the global marketplace through the development of community-based strategic plans and

international benchmarking of economic performance. These functions are labelled

“policy, advocacy and co-ordination” (PAC) and such intelligence gathering and

environmental scanning are integral to identifying and responding to opportunities and

challenges in the regional economy. PAC provides economic analysis and well-grounded

advice to support RDA priorities as well as federal ministerial decision making about

policies and programming. Co-ordination work helps each region to create integrated

approaches to development while advocacy brokers opportunities for regional businesses

in federal and provincial procurement opportunities. Increasingly, the RDAs are

undertaking regional risk analysis in consultation with local stakeholders and funding

partners as a means to calibrate programming, channel expenditures and implement

temporary, targeted initiatives responding to problems or pressures specific to the region

or a sub-region within. As part of its PAC functions, the RDAs typically lead the

regionally based federal departmental councils for horizontal co-ordination, participate in

federal-provincial collaborations on labour force skills development, international

business development, and global trade strategy, and consult with one another on best

practice interventions and systems for performance measurement and programme review.

Community networks: The RDAs support the local activities of the community

futures organisations (CFOs). Dating back to the mid-1980s, the CFOs bring together

volunteer boards and RDA staff to plan and deliver business services, investment funds

and community strategies. Decision making takes place at a local level through a board of

directors, involving local volunteers and community organisations. The federal government

contributes through the RDAs nearly CAD 100 million to support 258 CFOs located

outside major metropolitan areas, except in Quebec where 15 CFOs are located in

disadvantaged areas of the province’s major cities. Funding can be used to provide

repayable financing to local businesses, training for small and medium-sized enterprises,

strategic community planning, and support for community-based projects. With its funding,

the federal government includes broad policy directions that reflect evolving national

priorities, such as outreach to Indigenous entrepreneurs, capital for social enterprises and

youth employment. Local CFOs have considerable latitude to plan and deliver targeted

support to industries or communities experiencing downturns. The RDAs provide technical

support and assess CFO performance targets to ensure compliance with terms and conditions.

Evaluations report positive CFO impact in improving access to capital and business

services, strengthening community strategic plans, and adapting to trends revealed through

regional research and analysis. Such flexibility is demonstrated as CFOs create regional

collaborations to plan and deliver major infrastructure projects such as rural broadband,

and make referrals to other federal or provincial programmes to minimise duplication and

pool investment funds for greater business impact and scale economies. The CFOs are

connected through national organisations and regional networks that share best practices

and identify emerging issues.


Infrastructure programming: The RDAs play an important role in delivering federal

infrastructure programmes in partnership with provinces, territories, municipalities and

First Nations. In the context of the 2009 global recession, each RDA used its existing

networks, sectoral knowledge and managerial capacities for timely and targeted

implementation of the CAD 50 billion Canada Economic Action Plan’s shovel-ready

programmes: the Community Adjustment Fund, the Recreational Infrastructure Program

and the Building Canada Fund. Rolled out over two years, the RDAs worked to make the

investment provide both short-term employment stimulus and longer term promotion of

economic growth and knowledge-driven innovation. As part of its economic recovery

plan, the federal government also established two new RDAs, one for the northern territories

and one for southern Ontario, ensuring that the two distinctive regions each impacted by

the global recession would receive appropriate policy support. All infrastructure spending

under the Canada Economic Action Plan was completed by 2011 and subsequent reviews

found the ambitious programme was well-managed and delivered through the RDAs.

Canada’s six RDAs all work with these four basic policy instruments, reporting to

parliament through the Minister of Innovation, Science and Economic Development on

their activities and performance. Beyond these common elements, there are differences in

specific priorities and programmes, reflecting how each RDA adapts to its regional policy

setting. Annex A describes in detail key aspects of this operational variation, highlighting

projects from each of the six RDAs.

In sum, Canada’s six RDAs have institutionalised governance flexibility in the design

and implementation of regional development policy. They supply a “regional lens” that

translates national goals into regional settings while also promoting those same

subnational interests in federal policy making. They tailor support to the distinctive

needs, priorities and capacities of regional economies at the same time that they adapt to

shifting federal goals and evolving local conditions. Table 3 captures key performance

features of Canada’s flexible regional governance through the RDAs.

Table 3. Flexible regional governance in focus

Policy dynamics Canadian mechanisms

Regional innovation Institutional intermediary/regional development agencies

Flexibility “change over time” Temporary and targeted measures; short-term-long term stimulus package; calls to action; consultation/learning; audit, evaluation, strategic review; research

Adaptability “variation across space” Regional policy lens for hybrid contracts implementing national goals through regional/local “geographic clustering”

(Re)negotiation process Federal-provincial management committees; federal-First Nations agreements

Strengths Pan-Canadian coverage of regional innovation

Weaknesses Federal-provincial duplication or policy cross-purposes

Territorial policy adaptation: Departmental devolution

Alongside the six RDAs which have acted as flexible institutional intermediaries for

economic development, Canadian federalism features policy devolution whereby federal

and provincial sectoral departments engage municipalities and regional or community

organisations to deliver national programmes or services in locally sensitive ways

(Burstein and Tolley, 2011). Where in the past, federal or provincial/territorial departments

delivered programmes with set mandates, a recent trend in selected policy fields has been

to use various governance mechanisms granting policy authority to local actor networks.

Such networks may include municipalities, multi-sectoral stakeholders, community advisory

boards or development agencies. Rather than just funding and oversight, this form of


departmental devolution provides for more adaptive implementation through shared

decision making and trust-building from the head office to the front lines. Based on

recognition that most policy problems, complex in their causality and interdependent in

their effects, manifest themselves differently depending on the context in which they

occur, the devolution strategy taps into the knowledge and capacity of local organisations

and governments. The experience of poverty, homelessness and environmental degradation,

for example, differs in rural versus urban settings, in communities that are demographically

diverse rather than homogeneous, and in regions which are economically vibrant not

stagnant. Top-down, inflexible or one-size-fits-all approaches are ill-suited to address both the

particularity of the problem mix and community capacity to address it. Contribution

agreements reflect the hybrid contracting logic – with the upper-level government funder

setting general objectives and performance expectations while supporting the local

governance network to select priorities, package services and allocate funding for the

community.

While Canadian public policy has rarely seen formal or full devolution of policy

authority from federal to provincial governments (labour market training is one recent

example where the federal government transferred programming, funding and staff to the

provinces), federal departmental devolution through provincial consent to local actors has

been used in a variety of policy fields in Canada. Using the hybrid approach, Canadian

policy officials are blending the directives and expectations of transactional contracts with

relational elements responsive to changing community needs and maturing organisational

capacities. Annex B describes in detail three leading examples of Canada’s territorial

adaptation of national policy, each demonstrating the balance between central governments

accountable for public expenditures and local networks working creatively within the policy

framework for customised interventions in social and physical infrastructure. The three

programmes are in immigrant settlement, sustainable infrastructure and homelessness shelter.

Canada’s regionalised policy approach through territorial adaptation has brought

important local and community knowledge to federal programmes. It institutionalises

place-based governance and embeds geographically distinctive knowledge and networks

in national policy. In complex policy fields, territorial adaptation uses the principle of

“flexible conditionality” in financial transfers to align federal goals, regional priorities

and local capacities. Table 4 captures key performance features of the federal-local

implementation networks.

Table 4. Territorial policy adaptation in focus


Territorial customisation National policy frameworks and local implementation networks

Flexibility “change over time” Federal objectives “localised” through “flexible conditionality”

Adaptability “variation across space” Local governance entities; integrated community strategic plans

(Re)negotiation process Results-based hybrid contract renewal

Strengths Place-based decision making

Weaknesses Overly prescriptive federal direction/weak community capacity

Community-based regionalism: Learning pilots

Canadian policy makers have implemented a host of place-based pilot initiatives to

tackle “wicked problems”, those that are deep-seated, causally complex and beyond the

resources of any single actor. Established interventions or off-the-shelf solutions offer

little guidance. In such cases, inter-sectoral and multilevel approaches are required for


governments and communities to learn about policy design and programme implementation.

The explicit purpose of collaboration is to generate and apply problem-solving knowledge,

supplying new direction for both governments and communities alike. Pilots and

demonstrations to reach their learning potential require development of new evaluation

tools that value equally policy experimentation, experiential knowledge and results-based

accountability. Through dialogue and reflection governments gain insight into which

interventions work best where and under what conditions. Successful innovations can be

tested in other communities and lessons scaled up for regional policy refinements. In

Canada over the last decade, place-based pilots have been launched by the RDAs as well

as by the federal government working in partnership with various community organisations

and stakeholder associations.

Annex C describes in detail three prominent examples of community-based regionalism,

each illustrating the governance flexibility and implementation adaptability integral to

pilot projects. The three initiatives are: 1) urban social development agreements;

2) neighbourhood revitalisation projects; and 3) sustainability policy knowledge-brokering.

Canada’s version of community-based regionalism introduces elements of flexibility

and adaptability into public policy through experimentation, learning and knowledge

transfer. Targeted to wicked problems that are localised or regionalised in expression and

for which existing approaches fall short, this approach supports innovation by generating

new policy knowledge that is shared vertically among governments and horizontally

across communities. The result is a type of mutual empowerment that can improve overall

policy capacity. Table 5 captures key performance features of Canada’s community-based

regionalism.

Table 5. Community-based regionalism in focus


Knowledge sharing and capacity building Learning pilots and demonstration funds

Flexibility “change over time” Policy dialogue, learning by doing, winning ideas/experiments institutionalised as policy innovations

Adaptability “variation across space” Project testing, knowledge generation and sharing

(Re)negotiation process Community-based evaluation and securing new funding partners

Strengths Time-limited low-risk experimentation

Weaknesses Failure to learn and scale-up lessons for policy

Conclusions

This paper has reviewed the historical evolution and contemporary practice of

Canadian regional development policy. Focusing on issues of flexibility over time and

adaptability across space and issues, the discussion offered the concept of metagovernance to

interpret the variety of structures, strategies and mechanisms deployed by governments –

especially the federal government – to align national goals, regional priorities and

community needs and capacities. Metagovernance usefully captures how the flexible

Canadian policy system both shares authority through institutional intermediaries and

departmental devolution, and adapts through collaborative governance and hybrid

contracting. Case examples of regional development agencies, territorial policy adaptations

and learning pilots illustrated how the diffuse initiatives are drawn together in a broad

national framework that supplies direction and sets parameters.

Overall, there are key lessons to draw from the decades-long Canadian regional

development policy experience. First, at a macro-historical level, as this brief review of


the successive waves of regional development suggests, Canadian regional policy making

has exhibited a notable degree of flexibility in mobilising expertise to adapt structures,

strategies and mechanisms to new regional ideas or development paradigms. Second, and

in the specific contemporary context of the new regionalism, Canadian metagovernance

has deployed hybrid contracting for exploring and advancing several dimensions of

policy innovation: linking the goals, priorities and capacities of different levels of

government and community; customising financial assistance by allowing contracting

parties to sequence transactional and relational types over time; and learning about “what

works where” through localised pilots that generate and transfer different forms of

knowledge to policy partners.

Of course, Canadian regional policy lessons also include certain limitations. Each of

the three main strategies – flexible regional governance, territorial policy adaptation and

learning pilots – have gaps and weaknesses that have been the subject of considerable

commentary and analysis (Bradford and Wolfe, 2012; Conteh, 2013). The RDAs face

ongoing challenges to their legitimacy and relevance in regional policy spaces dominated

by provincial governments and increasingly shaped by municipalities and First Nations.

Identifying the federal policy niche and adding and measuring developmental value

remains a work in progress for each RDA. National policy adaptations have not been

without their critics, especially on the community front lines where local actors have

sometimes found reporting regimes onerous or been distracted by unilateral policy shifts

complicating implementation. While learning pilots have generated significant policy

knowledge, both experiential and technical in nature, evidence of scaling-up insights to

either reform existing approaches or launch innovations is harder to find.

Each of these concerns speaks to a larger policy question in Canadian regional

development. Might it be time to create an institutional focal point for the presently diffuse

activities of metagovernance? Other federations have moved smartly in this direction,

creating permanent inter-governmental and cross-sectoral national tables or fora that

facilitate structured dialogue, strategic action and sustained learning. Canadian regional

development could now benefit from a more formalised and intentional national policy

community, bridging ideas and action across the levels and sectors (Jenson, 2004).

Existing flexibility and adaptability can be further leveraged for community benefit and

good public policy.

Along these lines, the Trudeau government in its first year in office has emphasised

multilevel collaboration and partnership with provinces, municipalities and Indigenous

peoples (Dunn, 2016). The Prime Minister is also the Minister of Intergovernmental

Affairs. With this priority, the government has revived traditional inter-governmental

dialogue structures, such as First Ministers Meetings for national priorities like climate

change and energy, while also implementing some novel approaches that may bring

innovation – further flexibility and adaptability – to Canadian regional development

policy.

The new processes are most evident in federal relations with Indigenous peoples and

with municipalities. For example, in its relations with First Nations, the Trudeau

government is considering a bolder collaborative model than the governance flexibility

built into the existing aboriginal transfer agreements. Responding to both the Truth and

Reconciliation Commission and the United Nations Declaration on the Rights of

Indigenous Peoples, the federal government is exploring the “collaborative consent

principle”. Pioneered by the government of the Northwest Territories, this decision model

works to achieve mutual agreement across all stages of the policy process from planning


to revenue-sharing for implementation “tailored to the matter at hand” (Fontaine, Phare,

and Miltenberger, 2015). Prime Minister Trudeau has favourably referenced the collaborative

consent approach as a promising model. In June 2016, a new institution was created – the

Federal, Provincial, Territorial and Indigenous Forum for “promoting reconciliation in

Canada”. In a similar spirit of innovation through collaboration, the Prime Minister and

several federal ministers have met with the Big Cities Mayors’ Caucus to work together

for a regionally tailored smart cities and green infrastructure agenda.

It is too early to know whether the Trudeau government’s collaborative approach to

federalism will endure or deliver substantial results. More certain is that Canada will

continue to be an instructive case for the flexible design and adaptive delivery of the new

regionalism.

In this spirit of cross-national policy learning, five key lessons emerge from the

Canadian multilevel governance and multi-sectoral approach to regional development

policy. These lessons might constructively inform ongoing policy adjustments and

experimentation, and innovation in Europe, Canada and other jurisdictions grappling with

spatial imbalances that challenge major goals of cohesion and innovation.

1. Establish a national “institutional focal point” comprised of representative

regional development policy stakeholders (governments, business, community,

researchers) to orchestrate and oversee the diverse policy networks and mechanisms.

Steering functions could include priority setting, knowledge brokering, lesson

sharing and capacity building. A key priority for such an institutionalised

leadership table would be to build consensus around a protocol for achieving

flexibility and adaptability within the contractual frameworks governing

regional development policy. The Canadian experience deploys a variety of

“policy adjustment mechanisms” and these should be formalised in a protocol that

balances flexibility with the rights/responsibilities of the policy partners.

2. Through deep stakeholder consultation articulate a shared vision of regional

development that is linked to specific leadership coalitions and implementation

mechanisms. An animating vision embedded through practice would build regional

identities, entrepreneurial cultures, and inter-community and inter-governmental

relationships. It would provide the supportive context for regional development

policy success.

3. Adopt a “place-based policy lens” with multilevel interventions implemented

through hybrid arrangements that mix transactional and relational contracts in

accordance with localised conditions, priorities and capacities. Build regional

resilience through integrated strategies that balance rather than trade-off

economic, social and environmental goals.

4. Implement the place-based policy so as to capture spatial interactions and

leverage community interdependencies – urban and rural; suburban and urban;

dispersed smaller centres (single industry or resource based) across larger

subnational territories.

5. Nurture a regional development policy “learning culture”. This combines

“strategic foresight” with explorative and evaluative research regional policy

capacity. A learning culture is foundational for a multilevel policy system that can

adjust goals and instruments through project-based experimentation.


The Canadian experience suggests that these five lessons can improve the practice of

multilevel regional development policy at governance scales ranging from European-wide

to national governments and localised community networks.

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Annex A.

Regional development agencies in focus

Western Economic Diversification: Adjusting to low commodity prices

Western Economic Diversification (WED) was established to diversify the historically

narrow economic base of Western Canada by assisting in the modernisation of traditional

resource industries, strengthening the infrastructure of communities and supporting the

transition to knowledge-based sectors. While growth in Western Canada continues to be

largely resource-driven, the recent drop in commodity prices, particularly oil, has taken

its toll on the region. Assessing the impacts across the four provinces within its remit, the

WED reviewed its projects in consultation with stakeholders to identify new challenges

and productive adjustments. The five-year Western Economic Partnership Agreement

(WEPA) provided the WED with the joint decision-making tool to invest in programming

focused on promoting research and development, commercialising new technologies, and

supporting trade to help industries and communities to become more competitive through

reduced dependence on natural resources. Co-chaired by senior federal and provincial

officials across the region, the objectives and terms and conditions of the WEPA reflected

input from experienced voices familiar with the sectors, markets, technologies and

networks, ensuring a representative and viable investment portfolio with sub-regional and

sectoral projects.

The WEPA also exhibited flexibility along several lines. First, while the federal and

provincial governments share overall contributions to the agreement equally, the timing

of specific cash flows was co-ordinated between the governments for optimal budgeting,

for example, by delaying or accelerating expenditures in relation to different fiscal calendars.

Second, the WEPA recognised that individual provincial priorities within the region evolve

across strategic sectors or policy priorities, and ongoing project review and approval

processes were a mechanism through which the funding partners could direct projects

toward emergent, shared priorities, such as hosting Olympic and Paralympic Games or

strengthening Indigenous peoples inclusion. Each provincial government was invited to

define evolving priorities and the WED worked to align these with the broader federal

regional development goals. Third, the WEPA’s flexibility over time was manifest in the

spin-off and follow-on projects from the technology, knowledge, networks or services

resulting from the initial investment. WEPA projects are reported to have generated a host

of impacts including commercialising new products, exploring new markets, adopting new

technologies and building partnerships. Alongside these benefits, WEPA participants

identified certain rigidities arising principally from differing federal and provincial decision

criteria and reporting requirements, and from the unwillingness of some provincial

governments to establish dedicated or stable funding sources, leaving the partners exposed

to spending cutbacks or policy shifts.

Atlantic Canada Opportunities Agency: Making the regional case

Struggling with high unemployment, slow population growth and dependence on

traditional industries, Atlantic Canada has always been a focal point for regional development

in Canada. The Atlantic Canada Opportunities Agency (ACOA) marked the policy shift

away from closing disparities with the rest of Canada toward developing regional potential.

Central to this transformation, the ACOA’s priorities include bringing the knowledge-based


economy to traditional resource sectors and enhancing export growth through inter-provincial

networks and international trade agreements. The ACOA is comprised of four regional

offices, local field offices and an Ottawa office. In addition to its partnership funding

agreements similar to the WED’s WEPA, the ACOA is active in the policy, advocacy and

co-ordination stream of regional development agencies’ (RDAs’) work. The agency works to

ensure that federal departments are aware of Atlantic Canada’s unique needs and economic

circumstances in areas such as innovation and commercialisation, labour markets, natural

resources and clean energy. The ACOA established a dedicated fund, the Atlantic Policy

Research Initiative, to build policy capacity through engagement with research partners and

economic and community stakeholders. Priority is placed on strategic topics such as the

links between entrepreneurship and economic innovation, the potential value of import

replacement as a tool for community economic development, small business access to

global value chains and benchmarking Atlantic Canada against other jurisdictions.

Based on economic analysis and trends research, the ACOA deployed an innovative

“call to action” for a regional “Clean Technology Initiative”. Aligned with priorities on

the federal innovation agenda and the Atlantic Canada Growth Strategy, the ACOA’s

Clean Technology Initiative is a CAD 20 million fund available to firms, non-profit

organisations and communities that can be enhanced if the applicant demand warrants. In

its advocacy work, the ACOA helped Atlantic Canadian small and medium-sized

businesses take advantage of opportunities arising from major international free trade

agreements and positioned regional firms for procurement contracts in federal investments in

defence and shipbuilding industries. Focused on the core mission of building a competitive,

innovative Atlantic Canadian economy, the AOCA makes strategic use of economic

analysis, intelligence gathering and policy research to monitor the factors impacting

regional growth and proactively address the risks. Together with provincial regional

economic boards, the ACOA partnered with municipalities to enhance local economic

development knowledge and tools. A robust local knowledge base underpins the ACOA’s

flexible approach to maximising the region’s potential, influencing national policies and

programmes, and co-ordinating with other governments and communities. Analysis informs

innovative projects like the Clean Technology Initiative that bridge traditional industries,

such as tourism and natural resources, and emergent sectors such as renewable energy

and ocean technologies.

Canada Economic Development Quebec: Responding to crisis and change

Canada Economic Development Quebec (CEDQ) faces particular challenges operating in

a context where respect for provincial jurisdiction and federal engagement are sensitive

political issues. Accordingly, the CEDQ has focused on economic development that

complements provincial initiatives in areas such as social enterprise, urban revitalisation, and

targeted responses to economic distress and community transition. The CEDQ has

supplied an economic development index to track growth across the provincial counties

and municipalities, financed several research projects to benchmark Quebec’s economic

development and policy tools in relation to international competition, and funded an

economic observatory for the province. The CEDQ’s overall priority is assistance to

low-growth areas that are dependent on traditional industries or experiencing economic

shocks or natural disasters.

In these cases, the CEDQ demonstrates operational flexibility through a series of

targeted or temporary initiatives that provide timely assistance to meet pressing local

needs. Funded through supplementary or special allocations for emergencies, the CEDQ

delivers support to a range of distressed communities, often in partnership with the local


community futures organisation. Examples include: CAD 35 million over seven years for

town reconstruction and enterprise assistance in the Economic Recovery Initiative for

Lac Magatic following a rail disaster; CAD 50 million over seven years for economic

renewal and community transition in local economies historically based on chrysolite

asbestos; and CAD 6 million over four years for communities impacted by the spruce

budworm outbreak. In addition to temporary and targeted interventions, the CEDQ has

worked with Indigenous communities for local economic development, consistent with its

federal government mandate. For example, contribution agreements have been negotiated

with First Nations representatives to build their own business networks to diversify and

strengthen economic development. Overall, the CEDQ is viewed as a federal agency

working productively to support economic development in Quebec by complementing

provincial initiatives and identifying specific policy niches where the federal government

adds unique value. An evaluation of the CEDQ concluded that it succeeds through

“flexible, direct intervention” and “the ability to be a catalyst for local strengths.”

FedDev and FedNor: Intermediating a crowded policy space

In Canada’s most populous province, Ontario, there are two RDAs, known as FedNor

and FedDev. Both are small in resources and capacities compared to powerful provincial

economic development and innovation ministries, and unlike the WED and the ACOA,

neither Ontario RDA has ever had its own federal minister or relative autonomy from the

sponsoring federal departments. Operating as federal funding vehicles and delivery agents

in a crowded provincial policy space, FedNor and FedDev must be nimble in their

operations and adaptive in their priorities. Their policy value-added is demonstrated, not

unlike the CEDQ, through strategic partnerships and alignment with provincial goals, and

increasingly, municipal economic development aspirations. Beyond other governments,

FedNor and FedDev partners include post-secondary institutions, not-for-profit organisations,

firms and business networks, Franco-Ontarian associations and First Nations. Through

the Northern Economic Development Program and Community Futures Program, FedNor

has concentrated on industrial upgrading, diversifying resource sectors, retaining workforce

talent and regional connectivity. It has recently worked effectively as an intermediary

between the federal innovation agenda and the economic development priorities of the

provincial government seeking complementarity of approaches through projects and

initiatives. Working with First Nations, FedNor has been the lead federal partner on the

Ring of Fire mining development, youth employment initiatives and region-wide partnerships

with northern Ontario post-secondary institutions for enhanced business innovation. FedNor

has also collaborated with provincial ministries in the implementation of longer term

Ontario economic and social development plans for sustainable forestry, tobacco agricultural

adjustment and accessible healthcare services.

With a nearly 30-year history of regional programming in Ontario, FedNor’s successful

intermediation between federal and provincial priorities has been instructive for FedDev,

the RDA created in 2009 as part of the recession recovery package. Renewed in 2013

with a five-year CAD 1 billion budget, FedDev’s Prosperity Initiative targeted strategic

investments for enhanced productivity in traditional and emerging industries, regional

economic diversification, and infrastructure renewal. A flagship project is the CAD 60 million

Southern Ontario Water Consortium created in 2011, where FedDev leveraged seed

investments from the provincial government and private business to create a platform

across 8 universities, 60 industry partners and multiple municipalities for world-scale clean

water research, testing and technology development. FedDev has supported Ontario’s “Places

to Grow” framework for the Greater Golden Horseshoe by adapting its programming to


specific restructuring challenges in different sub-regions. In the southwestern industrial

belt, FedDev facilitated community economic transitions following plant closures or

downsizing, while in more prosperous regions like Toronto and Kitchener-Waterloo it has

supported technology clustering along the Ontario Innovation Corridor. FedDev’s flexibility

is evident in responding to special infrastructure projects, such as the CAD 8 million

cultural revitalisation of Toronto’s Massey Hall or CAD 12 million remediation of

industrial sites in Brantford.

CanNor: Working with Indigenous peoples

CanNor was established in 2009, also part of the federal recovery plan. As the RDA

for the three northern territories (Yukon, Northwest Territories and Nunavut) CanNor is

important as the federal government plays a more direct governing role than in the provinces.

Encompassing nearly 40% of Canada’s land mass but home to only 113 000 people, the

northern territories face unique development challenges and opportunities. Indigenous

peoples make up the majority of many communities, making it imperative that CanNor

build relationships and legitimacy with First Nations representatives. CanNor adapts to its

policy environment through careful identification of community power structures,

outstanding land claims, and collaboration with diverse networks of territorial and First

Nations governance. Given that Indigenous populations are Canada’s youngest and fastest

growing, CanNor has made skills training a priority, tailoring programmes to retain youth

in northern industries. Many resource-based development projects involve complex

regulatory issues at the intersection of the environment and economy. CanNor’s Northern

Projects Management Office provides accessible and timely expertise and guidance,

convening dialogue among industry, First Nations representatives and relevant federal

and territorial departments to ensure community readiness, and reporting to the public on

progress. CanNor also adopts a longer term development vision with an economic

development index to track and stimulate diversification of industries and sectors.

Following an initial evaluation of CanNor that identified weaknesses in the administration

and monitoring of contribution agreements, the agency has taken corrective measures,

such as targeted incentives for skilled and experienced programme officials to relocate

north.

Regional development agency budgets

Each of the six RDAs allocates its budget among three core priorities: 1) business

innovation; 2) community development; 3) knowledge mobilisation/policy advocacy.

Details of individual RDA spending breakdowns are available through the agency website

links below.


Table A.1.Western Economic Diversification Canada

CAD

2016-17 Main estimates

2016-17 Planned spending



173 391 536 173 391 536 172 658 701 143 478 701

Source: www.wd-deo.gc.ca/eng/19121.asp#sec1c.

Table A.2.Canada Economic Development for Quebec Regions

CAD





303 119 941 303 119 941 255 407 651 235 596 508

Source: www.dec-ced.gc.ca/eng/resources/publications/rpp/2016-2017/329/index.html#fnb5.

Table A.3.Atlantic Canada Opportunities Agency

CAD





308 197 204 308 197 204 305 049 456 291 691 456

Source: www.acoa-apeca.gc.ca/eng/publications/ParliamentaryReports/Pages/RPP_2016-17_SecI.aspx#PE.

Table A.4.Western Economic Diversification Canada

CAD





26 233 451 26 233 451 25 109 964 21 922 964

Source: www.cannor.gc.ca/eng/1455641518517/1455641579623.

Table A.5.FedNor

CAD




54 043 384 54 118 384 51 258 384

Source: https://www.ic.gc.ca/eic/site/017.nsf/eng/07571.html.

Table A.6.FedDev Ontario

CAD





234 447 852 234 447 852 220 375 907 184 983 723

Source: www.feddevontario.gc.ca/eic/site/723.nsf/eng/02302.html.

http://www.wd-deo.gc.ca/eng/19121.asp#sec1c

http://www.dec-ced.gc.ca/eng/resources/publications/rpp/2016-2017/329/index.html#fnb5

http://www.acoa-apeca.gc.ca/eng/publications/ParliamentaryReports/Pages/RPP_2016-17_SecI.aspx#PE

http://www.cannor.gc.ca/eng/1455641518517/1455641579623

https://www.ic.gc.ca/eic/site/017.nsf/eng/07571.html

http://www.feddevontario.gc.ca/eic/site/723.nsf/eng/02302.html


Annex B.

Territorial policy adaptation in focus

Immigrant settlement: Local immigration partnerships

Canada’s immigrant settlement sector has recently experienced intense pressure from

global economic change and the increasing ethno-racial diversity of newcomers with

complex needs (Bradford and Andrew, 2010). In 2005, the federal Department of

Citizenship and Immigration Canada and the Ontario Ministry of Immigration and

Citizenship concluded the first Canada-Ontario Immigration Agreement to enhance services

through community-based planning around the needs of newcomers and implementation

of locally specific integration strategies. The Association of Municipalities of Ontario and

the city of Toronto were also partners bringing knowledge of local priorities to the

negotiation. Through the Canada-Ontario Immigration Agreement, a call was issued for

institutional innovation through “local immigration partnership councils” (LIPs) to co-

ordinate mainstream and settlement services for newcomers, including language training,

health, education and labour market programmes. The federal government contributed about

CAD 10 million annually to assist the LIPs in three tasks: establishing a local partnership

council with multi-sectoral representation that includes municipal government, settlement

agencies, mainstream community organisations and employers; researching and developing a

local settlement strategy to be implemented over a three-year timeframe to improve

access to and co-ordination of immigrant integration services; and submitting an annual

action plan tracking outcomes for immigrants, outlining priorities for the coming year and

reporting on the strategy’s implementation to date including partnership strategies beyond

the federal funding window.

Within three years, nearly 50 councils were established, including partnerships with

provincial francophone agencies. LIP structures bridged the municipal and community

sectors in regionally sensitive ways. In larger cities with robust immigrant settlement

networks, service providers often led while in mid-sized cities municipalities came

forward, sometimes in partnership with mainstream organisations such as the United Way

or the local economic development corporation. Planning priorities similarly varied by

region. In more remote communities, immigrant attraction drove the process; in mid-sized

cities, challenges of service enhancement and immigrant retention prevailed; and in the

Greater Toronto Area, with multiple agencies in play, the priority was service integration

for better immigrant settlement. Through place-based implementation, the LIPs expressed

Ontario’s varied immigration geography, drawing on the experiential knowledge of

frontline service providers and newcomers themselves for relevant programming. Not

surprisingly, the federal government praised the LIPs for their local innovations in

regional policy challenges, and expanded programme coverage to other provinces and

regions. In 2015 and 2016, the LIPs demonstrated their adaptability in mobilising local

resources to help settle the 25 000 Syrian refugees arriving in Canadian regions through

the federal immigration policy.

Homelessness reduction: Homelessness Partnering Strategy

The Homelessness Partnering Strategy, originally known as the National Homelessness

Initiative, works with communities to provide stability to increase shelter options for

homeless Canadians (Klodawsky and Evans, 2014). The programme began in the late

1990s when homelessness became more visible in Canadian cities as federal and provincial


governments withdrew from social housing. Under pressure from big city mayors, in 1997

the federal government announced a three-year CAD 753 million National Homelessness

Initiative for shelter needs and community supports but not social housing supply.

Initially proposed for only the 10 largest cities, extensive consultations expanded the

eligibility to include 51 additional communities, with dedicated funding streams for remote

communities and First Nations. The key programme was the CAD 305 million Supporting

Communities Partnership Initiative that provided funding for municipal and community

partnerships to implement local solutions, supplying emergency shelter and levering supports

for more permanent housing. In 2007, with the change of federal government, the initiative

was rebranded the Homelessness Partnering Strategy, allocating CAD 1.9 billion over five

years with a further five-year renewal in 2013. The 61 communities receiving funding are

required to convene a representative group of stakeholders including officials from all three

levels of government to ensure that local plans are comprehensive in issue and client coverage

and align with existing provincial, territorial or municipal programmes. The contribution

agreements are managed by the sponsoring federal department and programmes are

delivered by community organisations in co-operation with the government.

A notable innovation in both the National Homelessness Initiative and the Homelessness

Partnering Strategy is the presence of governance models tailored to meet the specific

needs and capacities of different communities. Under the community entity model, an

incorporated community organisation takes the lead in deciding the projects to be funded

under the contribution agreement and the appropriate delivery vehicle. In the shared

delivery model, the responsible federal department, with the assistance of a regional

officer, makes funding decisions based on community advisory board recommendations.

Although communities are involved in the planning, development and implementation of

programmes in both models, decision making rests with the community under the

community entity model and shifts to the federal government under the shared delivery

model. In some cases, cities began using a shared delivery model but later shifted their

approach to the community entity alternative. While not a national social housing

programme, Canada’s local governance approach to combating homelessness has been

seen as a strong success and a “groundbreaker” for extending departmental devolution to

other complex policy fields where regionalised programming is required. The programme’s

adaptability was evident in several dimensions: the initial big city design was greatly

expanded based on public input indicating greater regional need; community planning

empowered a sector-wide network to build further funding partnerships; and the flexibility of

the two governance models enabled many communities to build the capacity to move

from the shared delivery to the community entity model. Finally, while communities often

found the reporting requirements onerous, the result was an evidence base allowing the

initiative to progress from an initially ad hoc crisis response to become a regular federal

programme, one recognised by UN-Habitat as best practice in urban social governance.

Sustainable infrastructure: Gas Tax Fund

For many years Canada’s big city mayors called on the federal government to share

revenues from fuel taxes to address municipal fiscal challenges and infrastructure. Between

2005 and 2007 the federal, provincial and territorial governments concluded 13 transfer

agreements for a national Gas Tax Fund (Adams and Maslove, 2014). The terms and

conditions are a prime example of hybrid contracting. Wanting to avoid both the disputes

that accompanied conditional grants/transactional contracts and the ceding of policy direction

associated with unconditional grants/relational contracts, the federal government consulted

extensively with mayors, municipal associations and provincial/territorial governments. The


result was a CAD 5 billion “other transfer payment” to be paid over five years through

provincial/territorial governments to municipalities. To ensure that the monies were spent

on the municipal infrastructure intended by the federal government, several basic principles

were outlined: provinces/territories could not claw back their current level of infrastructure

support; in exchange for predictable funding, municipalities would select projects in

approved sustainability categories reflecting federal environmental and infrastructure

objectives; municipalities would be accountable for demonstrating the value of new

investment by issuing annual expenditure reports benchmarking performance, with penalties

for non-performance or non-compliance; and funding would meet needs of smaller

communities and big cities such that eligible categories included urban transit priorities,

rural needs in roads and bridges, and regional strategies for community energy. For

enhanced impact with larger regional projects, neighbouring municipalities were permitted to

pool, bank and borrow against their allocations.

The Gas Tax Fund’s hybrid contracting has been lauded for its mix of flexibility and

accountability in aligning federal policy objectives with municipal or regional infrastructure

priorities. The emphasis on local knowledge and sustainability planning was evident in

the federal requirement that municipalities develop “integrated community sustainability

plans” to situate infrastructure investments in a longer term framework and collaborative

approach. The federal government encouraged integrated planning by offering capacity-

building support and flowing the bulk of the funds in the concluding years, giving

municipalities time to formulate optimal investments. In addition to encompassing urban

and rural infrastructure priorities, the Gas Tax Fund’s adaptability was further demonstrated

in implementation where in several provinces the administering agency was not the

government but municipal associations. In Ontario, Quebec and British Columbia, these

representative bodies drew on their knowledge and networks to strategically direct and

creatively manage the federal investment. The Gas Tax Fund’s hybrid transfer was

well-received and made permanent in 2008. Municipal officials prefer it to traditional

government infrastructure programmes that require time-consuming project-by-project

applications, and the federal government views it as a sound design for long-term

infrastructure investment merging joint economic and environmental goals.

References

Adams, E. and A. Maslove (2014), “The federal gas tax cession: From advocacy efforts

to thirteen signed agreements”, in: Andrew, C. and K.A.H. Graham (eds.), Canada in

Cities: The Politics and Policy of Federal-Local Governance, McGill-Queen’s

University Press, Montreal and Kingston.

Bradford, N. and C. Andrew (2010), “Local immigration partnership councils: A promising

Canadian innovation”, paper prepared for Citizenship and Immigration Canada, July.

Klodawsky, F. and L. Evans (2014), “Homelessness on the federal agenda: Progressive

architecture but no solution in sight”, in: Andrew, C. and K.A.H. Graham (eds.),

Canada in Cities: The Politics and Policy of Federal-Local Governance, McGill-

Queen’s University Press, Montreal and Kingston.


Annex C.

Community-based regionalism in focus

Tri-level policy innovation: Urban development agreements

Between 1981 and 2010, Western Economic Diversification Canada (WED) implemented

a series of urban development agreements (UDAs) as experiments in multilevel, spatially

targeted cross-sectoral policy making to co-ordinate public investments, align programmes

and services, and promote social innovation (Bradford, 2014). The UDAs expressed a

wider shift in federal regional development policy from redistributing opportunity or

enticing individual firms to lagging regions, toward catalysing development networks in

cities and communities as engines of revitalisation and innovation. Established as pilot

projects in Winnipeg and Vancouver, the UDAs practice collective decision making in a

“nested” inter-governmental structure with three basic tiers: at the apex is the Political

Table or Policy Committee comprised of federal and provincial ministers and mayors

responsible for overall direction; reporting to the politicians is the Administrative Committee

with senior officials from all three levels of government and responsible for administration of

the agreement and its partnerships; at the operational level, a community-based office

delivers projects, conducts outreach and facilitates public awareness of the UDA.

The UDAs utilise hybrid contracting. The Vancouver Agreement, an initially unfunded

partnership, began with a relational approach, emphasising dialogue, information sharing

and community consultations to identify priorities within a population health framework.

It was estimated that some 300 community organisations were active in the troubled

Downtown Eastside and could potentially be engaged through the Vancouver Agreement.

The federal government brought 12 departments to the table, the provincial government

19 ministries and agencies, and the municipality 13 organisations, including the Vancouver

School Board and the Vancouver Coastal Health Authority. An Integrated Strategic Plan

emerged and the provincial and federal governments allocated a combined CAD 20 million to

fund specific projects engaging the three levels of government with community partners,

including North America’s first Safe/Supervised Injection Site based on a three-year

exemption from federal drug legislation, provincial investment in targeted health and

wellness support, and community policing practices to ensure public safety in the area;

and multiple community economic development projects that used public procurement

and equity contracting for social entrepreneurship and vulnerable resident employment.

For these funded projects, the Vancouver Agreement gravitated to transactional contracts

with traditional results-based accountabilities.

In Winnipeg, the progression of contracting types was reversed. There, UDAs were

substantially funded. In the first two five-year agreements, tri-level government

investment of CAD 196 million levered an additional CAD 600 million from public and

private sectors. Major capital spending transformed the inner-city built environment, and

urban development corporations became vehicles for business development and

neighbourhood revitalisation. Subsequent UDA renewals in Winnipeg responded more to

community concerns about social inclusion and the participation of disadvantaged groups

in project planning, and the governance relationship moved from the transactional to the

relational as the partners explored more grass-roots community building and social

economy approaches with special emphasis on Indigenous peoples.


With their dual emphasis on policy collaboration and pooled funding, the UDAs will

inevitably mix relational and transactional instruments in implementing projects. Along

the hybrid continuum, the substantially funded Winnipeg UDAs were more transactional,

where the initially unfunded Vancouver Agreement followed a more relational logic. The

flexibility of the UDA model and its adaptability to different local conditions are its

strength. Agreements can deliver large-scale, place-based investments where federal-

provincial support is necessary for community implementation of local priorities (such as

affordable housing or skills training), and also customised funding when a community has

a winning idea but not the resources to experiment (such as social procurement or harm

reduction). A survey of UDA government partners found that nearly three-quarters of

respondents had “very often” changed their work based on information acquired or

lessons learnt through collaborative governance. The UDAs in Winnipeg and Vancouver

offered a model to be applied in other Canadian cities (Regina, Edmonton and Victoria)

and received international awards in public administration.

Federal-community action research: Neighbourhood revitalisation

In the early 2000s several research reports described growing spatial concentrations

of poverty in Canadian cities, reinforcing policy concerns about negative “neighbourhood

effects” that blocked individual and family progress (Bradford, 2014). The federal

government responded with Action for Neighbourhood Change (ANC), a two-year

CAD 7 million action research project launched in 2005. The ANC supported integrated

approaches to revitalising distressed neighbourhoods in five cities across Canadian

regions: Halifax, Toronto, Thunder Bay, Regina and Surrey. Its origins were in the

federal homelessness initiatives that embedded a prevention framework into housing

policy to address root causes. Four federal programmes representing three federal

departments joined forces in the ANC: Canada’s Drug Strategy (Health Canada), the

National Crime Prevention Strategy (Public Safety and Emergency Preparedness Canada),

and the National Literacy Secretariat and the Office of Learning Technologies (both at

Human Resources and Social Development Canada). Alongside the inter-departmental

collaboration, the ANC connected urban neighbourhoods to federal policy through

partnership with three national community organisations: the United Way of Canada, the

Tamarack Institute for Community Engagement and the Caledon Institute of Social

Policy. A National Steering Committee comprised of government officials, community

organisation representatives and local neighbourhood leaders provided overall guidance

and direction.

The terms and conditions of the ANC were set out in a framework agreement

concluded by the HRSDC and the United Way of Canada, the lead organiation for the

community partners. Notably, the five government agencies came to agreement on two

contribution agreements rather than the usual five, and on a single reporting and

evaluation framework. Such flexibility expressed the shared ownership among the

participating departments and simplified government reporting for community actors. The

agreement identified four core activities: policy development, action research,

neighbourhood planning and knowledge transfer. The goal was to build the capacity of

neighbourhood residents, organisations, businesses and service providers to develop a

common vision of change, and to strengthen the responsiveness of existing policies and

programmes to that local vision and identified problems The United Way of Canada

selected a distressed neighbourhood in each of the five participating communities and

supported a local facilitator to work with community residents and key stakeholders to

develop and implement a renewal strategy.


Conceived as a pilot, the ANC strategies were to generate capacity-building, encourage

policy dialogue and disseminate knowledge across regional neighbourhood networks. The

Policy Dialogue convened by the Caledon Institute joined departmental officials and

neighbourhood leaders in discussion along a continuum of collaborative challenges, from

routine information sharing on mandates to more demanding policy change through local

feedback. A “neighbourhood theory of change” was tested for place-based interventions,

identifying local coalitions and investment targets, and a “neighbourhood vitality index”

was created to blend quantitative and qualitative data. Piloting the tools came through

“project pool” grants for resident-led design and delivery of grass-roots initiatives such as

youth leadership, neighbourhood clean-up and community service hubs. These experiences

were catalogued and disseminated through ANC Community Stories that facilitated further

local collaboration through municipal and provincial anti-poverty or social inclusion

initiatives. The summative evaluation of the ANC concluded that the project had made

“outstanding progress” in relation to its core objectives. While the ANC action-research

project did not find a willing government partner when its mandate expired, its lessons

shape community-building and neighbourhood revitalisation in cities across Canada.

Federal-associational knowledge brokering: Green Municipal Fund

In 2000, the federal government used another financial transfer mechanism for a

novel partnership approach to sustainable regional and local development. It endowed the

Federation of Canadian Municipalities (FCM) with CAD 500 million (adding another

CAD 125 million in 2015) to manage a Green Municipal Fund (GMF), a long-term

source of financing for municipal governments and their partners to improve air, water

and soil quality, and to protect the climate. The GMF is a perpetual endowment fund with

annual funding limits to ensure prudent management. In 2015-16, the GMF approved

CAD 58 million in loans and grants for a wide range of municipal sustainability

initiatives including capital projects, feasibility studies and field tests of innovations.

With the endowment, the federal government recognises several realities simultaneously:

that municipalities are the primary stewards of Canada’s physical infrastructure; that local

officials have direct or indirect influence over close to half of all the greenhouse gas

emissions in Canada; and that the FCM was a high-performing representative association

able to manage and steer funding for citizen and community benefit. The FCM has

embraced the GMF’s knowledge development/dissemination and capacity-building

missions, supporting training and peer learning programmes about sustainability.

In 2015-16, the GMF tested new models of peer learning through initiatives such as

the Leadership in Asset Management Program, the Leadership in Brownfield Renewal

and Partners for Climate Protection. The FCM also launched a GMF pilot project to

improve its framework for gathering and disseminating the lessons learnt from funded

municipal sustainability projects. While all municipalities benefit from knowledge and

information, timely access to the most relevant materials and appropriate intelligence

increases the likelihood of project success. To enhance the quality of its knowledge brokering,

the GMF pilot project involved developing both stronger policy content and training of

front-line staff to share the most practical knowledge and assist municipalities in its local

application or adaptation. The GMF is also pioneering implementation of infrastructure

projects and measurement frameworks that demonstrate “triple bottom line” investment

returns, testing practical and flexible approaches for governments to balance or integrate

environmental, social and economic goals. In 2015, the GMF was recognised by the

United Nations Local Governments for Sustainability as one of the world’s most effective

initiatives in providing funding and knowledge for sustainable community development.


Reference

Bradford, N. (2014), “Neighbourhood revitalization in Canada: Towards place-based

policy solutions”, in: Manley, D. et al. (eds.), Neighbourhood Effects or

Neighbourhood-based Problems: A Policy Context, Springer Press, Amsterdam,

Netherlands.

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